Credit Card Kingpin Charged With a "Capital" Crime

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Yesterday, in a landmark settlement, America's Consumer Financial Protection Bureau (yes, that CFPB) required Capital One Financial (NYSE: COF  ) to pay a $60 million fine, and reimburse $150 million to consumers.

And what "capital" offense was it that laid the banker low?

According to CFPB, Capital One's telemarketers used "deceptive marketing tactics" to sell customers such credit card bells and whistles as identity theft protection, credit monitoring, and payment protection (where the card company makes your minimum payments for you in the event of job loss or illness).

Bad pitch
Whether these services have value is a matter of some debate. For example, a consumer can generally hold off on activating ID theft protection until the moment a data theft actually occurs. There's really no need to pay for the service month after month in the absence of an incident.

What's not in debate is that in selling these services, at least some of Capital One's vendors crossed the line, falsely telling cardholders that buying the services would "improve their credit scores" or that they would be provided free of charge.

In Capital One's defense, the company appears truly remorseful about the incidents, and admitted it did not keep close enough watch over what its vendors were telling its customers. The bank made the further stand-up statement that "we are accountable for the actions that vendors take on our behalf." This is a notable departure from most such settlements, in which companies pay token fines and agree to disagree with their regulators, but avoid admitting to any actual wrongdoing.

More crackdowns to come
As such, it's a good start for CFPB, which characterizes the Capital One case as its first "major" enforcement action -- and promises more to come. Capital One, after all, is hardly the only card company to have been hawking these products.

Reportedly, CFPB is also looking into similar allegations at Discover (NYSE: DFS  ) , American Express (NYSE: AXP  ) , and Bank of America. Let's hope these others are as responsible as Capital One in owning up to their mistakes, and making their customers whole again.

To stay updated on all the happenings surrounding any of the companies above, make sure to add them to our Foolish Watchlist feature. It'll deliver up-to-date news and analysis on all your favorite companies.         

Fool contributor Rich Smith holds no position in any company mentioned. The Motley Fool owns shares of Bank of America. Also, The Motley Fool has created a bear call spread position in American Express, and Motley Fool newsletter services have recommended creating a write covered strangle position in American Express.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1951160, ~/Articles/ArticleHandler.aspx, 10/21/2016 8:14:27 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:01 PM
COF $74.89 Up +0.38 +0.51%
Capital One Financ… CAPS Rating: ***
AXP $67.36 Up +0.58 +0.87%
American Express CAPS Rating: ****
DFS $55.35 Down -0.21 -0.38%
Discover Financial… CAPS Rating: *****